Former NCUA Employee Offers Insight Into FOM, Chartering

Editor's Note: the following is from a comment letter on NCUA's FOM and Chartering Manual from Charles Agricola, a former NCUA employee.

As a retired NCUA employee and current consultant working with credit unions, I understand the importance of federal community charters and the need to stay abreast of changes. Under the present community chartering environment for federal credit unions, NCUA rules and policies have been vague, inconsistent and leaving much to the imagination of both the applicants as well as the regulator.

The proposed rule succeeds largely in providing better guidance, especially to applicants seeking multi-jurisdictional areas by using objective standards. Several sections in the proposed rule, however, require enhancement for improved clarification and consistency.

Section V.A.3-Public Notice Procedures:

Publication is a reasonable requirement as espoused in the proposed rule. However, publishing the notice in the Federal Register would be costly and is a virtual overkill. Requiring publication as a "legal notice" in the most widely read local newspaper in the proposed community is more realistic and cost effective. The local community contains the residents and organizations most likely to be affected either negatively or positively, and therefore, would be in a better position to provide meaningful and useful comments. Publication in the Federal Register likely would generate only comments from national banking organizations with political agendas and without vested interests in the local community.

Section V.A.2-Definition: Rural District:

This proposed definition eliminates districts in a Micro Statistical Area (MicroSA.) This is not logical since many of the MicroSAs are in rural areas with a single population center of between 10,000 and 50,000 and with a total population considerably under 100,000 people that are widely dispersed. Furthermore, job-commuting statistics are not always meaningful when related to rural districts.

In the case of a single-county MicroSA, many residents of adjacent and contiguous counties avail themselves of the shopping and entertainment venues afforded by the core center. Rural counties are largely self-employed farmers resulting in a low commuting statistics to the neighboring MicroSA. Nevertheless, these residents share a high degree of social and economic integration with the MicroSA through shopping, entertainment, farm organizations, farm bureaus, shared county fairs, etc.

Additionally, the ERS of the USDA considers a MicroSA as a rural area. Therefore, the proposed wording for "Rural Districts" should permit a MicroSA and/or contiguous/adjacent counties (not already in a Metro or another MicroSA) with an aggregate population totaling less than 100,000 people and a density population less than 100 people per square mile.